The Bank of Japan kept its monetary policy steady on Thursday but introduced new forward guidance to more clearly signal the future chance of a rate cut, underscoring its concern over simmering overseas risks.
As expected, the BOJ maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%, by a 7-2 vote.
But the BOJ introduced new forward guidance – or a pledge central banks make on future monetary policy – that more strongly commits to maintaining ultra-low interest rates.
“The BOJ expects short- and long-term interest rates to remain at present or lower levels as long as needed to pay close attention to the possibility that the momentum toward achieving its price target will be lost,” the central bank said in a statement.
The decision to change forward guidance was made by an 8-1 vote.
BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 p.m. (0630 GMT) to explain the decision.
